Archive for the 'Analysis' Category



01
Jan
16

Music Business Research 2015 – in retrospective

Dear readers of the music business research blog,

2015 Music streaming was again the main topic in the music business. In June, Apple Inc. introduced the long rumoured music streaming portal Apple Music to the public. Instead of a freemium tier Apple Music is built around an online radio station – Beats 1 – and enables direct contact between musicians and fans by Artist Connect. Nevertheless, Taylor Swift was not amused. She threatened to withdraw her music catalogue from Apple Music as long as no licensing fees are paid to rights holders in the initial trail period. Apple’s VP of iTunes, Eddy Cue, immediately responded by Twitter to announce that Apple Inc. has changed its mind and “will pay artist for streaming, even during customer’s free trial period”. However, the conflict shows that the discussion on music streaming payments to artists will continue in 2016. An analysis on the blog already addressed that problem – Music Streaming Revisited – the Problem of Income Distribution – and even superstars cannot afford a living from music streaming revenues: Music Streaming Revisited – The Superstars’ Music Streaming Income. It was also highlighted on the blog that the main winners of the music streaming boom are the major recorded music labels which can successfully market their catalogues: Who Benefits from Spotify & Co.?

Before Apple Music was introduced to the public, premium music streaming service Tidal was launched by Jay-Z and 16 further superstars of the music business in March 2015. It remains to be seen if the music fans are prepared to pay a monthly fee of US $19.99 for high fidelity music streaming. The number of subscribers since Tidal’s launch tells a different story.

In November 2015, Google unveiled the first details on YouTube Red. YouTube Red is the successor of Music Key, which never made it out of the beta version. The new streaming service aims to successfully compete with Spotify & Co. 2016 will show if the dreams will come true.

It is striking, however, that all the new music streaming services lack a freemium tier. This nurtures speculations that the end of free music streaming is near what would be applauded by high ranking music industry representatives who regularly clamoured the dismissal of Freemium music streaming models in 2015. It is, however, questionable if a stop of free music streaming is the golden rule for the music business since most of the music streaming markets are not fully developed yet as highlighted in a blog entry: Music Streaming Revisited – the International Music Streaming Market 2014.

Although music streaming seems to stabilize the recorded music markets – see e.g. U.S. and Germany – the first signs of a market consolidations has become visible. The German music streaming pioneer Simfy had to close down and the U.S. based streaming platform rdio went bankrupt in 2015.

Investors, however, do not bet on music streaming services anymore as the panel discussion “Financing Music in the Digital Age” within the 6th Vienna Music Business Research Days highlighted. The international music business research conference that again was held at the University of Music and Performing Arts Vienna in cooperation with Waves Vienna Festival & Conference also addressed the question in a presentation and panel discussion if streaming is a relevant revenue source for opera houses and concert halls. And the economic relevance of crowdfunding for the music business was analysed in a keynote talk too.

Continue reading ‘Music Business Research 2015 – in retrospective’

18
Jul
15

Music Streaming Revisited – the Problem of Income Distribution

The Rethink Music initiative recently published a report on “Fair Music: Transparency and Money Flows in the Music Industry”. The report identifies barriers in the money flows to artist and states:”[O]nly a small proportion of the money beyond the initial recording advances ultimately makes its way to artists as ongoing revenue.” (Rethink Music, 2015: 3). Especially in the digitized recorded music business the revenue streams are often obscure and non-transparent. And if it comes to music streaming, artists are sceptical about the underlying business model. Based on the report’s finding, the revenue streams from music streaming and the structures behind the business are analysed.

Continue reading ‘Music Streaming Revisited – the Problem of Income Distribution’

13
Jul
15

Music Streaming Revisited – The Superstars’ Music Streaming Income

Some artists have unveiled their royalties’ statements highlighting that just a small proportion of their income comes from music streaming services (e.g. cellist Zoe Keating in February 2013). However, the question remains open if and how the superstars benefit from shift to the music streaming business? In the following analysis the top superstars’ income from recorded music sales, music streaming, publishing and touring is highlighted. The statistics are based on the Billboard Money Makers List 2015 for the 40 top earners of the US music business. See here for the methodology[1].

Continue reading ‘Music Streaming Revisited – The Superstars’ Music Streaming Income’

30
Jun
15

Music Streaming Revisited – the International Music Streaming Market 2014

Music streaming is on the rise. In the recent IFPI report “Recording Industry in Numbers 2014” IFPI CEO Frances Moore is cited with “Streaming is now a mainstream part of the modern music industry.” (IFPI 2015: 5) Indeed, global subscription streaming revenue increased by 39.0 per cent and ad-supported streaming revenue by 38.6 per cent in 2014. In 2014, the global music streaming market (ad-supported as well as subscription) has a volume of US $2.2bn, which is even bigger than the single track download market (US $1.9bn) (IFPI 2015: 9). Music streaming, therefore, accounts for nearly a third of the global recorded music market. However, the market share of music streaming differs between countries. Whereas in Sweden the music streaming market share is 70 per cent of the overall recorded music market, in Germany just 6.3 per cent of the recorded music revenue comes from music streaming sources. And Japan, the second largest recorded music market in world, lags behind with meagre 3.1 per cent.

In the following I would like to highlight the economic relevance of the music streaming market segment in an international comparison.

Continue reading ‘Music Streaming Revisited – the International Music Streaming Market 2014’

16
Apr
15

The Recorded Music Market in Germany, 2003-2014

The recently published figures of the recorded music market in Germany show a picture of stability. Compared to 2013, the recorded music sales increased by 1.8 percent to EUR 1.48bn as reported by IFPI Germany (Bundesverband Musikindustrie – BVMI) in the latest Yearbook on the Recorded Music Industry in Germany (Jahrbuch zur Musikindustrie in Deutschland). The still fast growing revenues from the music streaming business are the main reason for the modest overall sales growth of 1.8 percent. The revenues from music subscription rose by 77.0 percent to EUR 108.0m compared to 2013. In the same period, however, long-play download sales (mainly digital album sales) declined for the first time – by1.4 percent to EUR 145.0m. The single track download sales again decreased – after a sales decline of 4.6 percent in 2013 – by 7.4 percent to EUR 100.0m. The physical music sales are still declining by 1.7 percent in 2014. Nevertheless physical sales are still dominant on the German recorded music market with share of 74.9 percent (without revenues from neighbouring rights collecting society GVL and from synchronisation). The CD is still the most important audio format of the recorded music market in Germany with sales of EUR 985.0m and a market share of 66.7 percent.

The details of the development of the recorded music market in Germany from 2003-2014 are highlighted in the following analysis.

Continue reading ‘The Recorded Music Market in Germany, 2003-2014’

26
Mar
15

The recorded music market in the US, 2000-2014

2014 seems to be the watershed year in the recorded music business in the US. According to the recently published sales figures (shipment value) of the Recording Industry Association of America (RIAA), the revenue of US $1.87bn from music streaming (SoundExchange distributions as well as subscription & ad-supported streaming) accounted for 41.4 percent of the digital music sales. Whereas music streaming revenue increased by 30 percent in 2014, digital album sales declined for the first time by 6.7 percent to US $1.16bn and digital singles’ sales by 10.2 percent to US $1.41bn. Additionally, the CD has become a by-product with a market share of just 27.4 percent (US $1.86bn). CD sales again decreased by 12.7 percent in 2014. All in all, digital music sales accounted for 66.5 percent of the US $6.78bn overall recorded music sales (except synchronization royalties). The total recorded music revenue slightly decreased by 0.4 percent compared to 2013.

 

In the following long-term analysis of the recorded music market in the US, the digitization process in past fourteen years is also highlighted as well as the tremendous change in the digital music market segment.

Continue reading ‘The recorded music market in the US, 2000-2014’

03
Jan
15

Music Business Research 2014 – in retrospective

Dear readers of the music business research blog,

Music streaming dominated the music business year 2014. Taylor Swift attracted global media attention when she pulled her music catalogue from Spotify music streaming service blaming the Swedish company for insufficient royalty payments. She, thus, followed the footsteps of Radiohead’s Thom Yorke and other artists who have criticized Spotify and other streaming services for poor payouts – a fact also highlighted in my blog post “Is Streaming the Next Big Thing? – The artists’ perspective”.

Nevertheless, music streaming has been a booming business model in 2014. Revenues from music streaming increased in almost all markets – e.g. in the U.S., Japan, Germany and Brazil. New services have been launched such as Amazon’s Prime Music and YouTube’s Music Key. And music subscription service Beats was part of the largest takeover in the music industry when Apple purchased Beats Electronics, but mainly for the valuable headphone line. Apple again was in the headlines when it announced that the latest U2 album “Songs of Innocence” was given away for free to all the Apple users – a US $100m marketing campaign for Apple with questionable results.

The business model of music streaming was also one of the main topics of the 5th Vienna Music Business Research Days on “How to Monetize Music in the Digital Age” (October 1-3, 2014), which were held the first time in cooperation with the Waves Vienna Festival & Conference at the University of Music and Performing Arts Vienna. A conference track day supplemented for the first time the Young Scholars’ Workshop and the invited conference day with conference papers presented by academics from Austria, Australia, Brazil, Croatia, Germany, Hungary, the Netherlands, Norway, Spain, Sweden and United Kingdom. In the course of the VMBR-Days the best paper of the Young Scholars’ Workshop was awarded for to Jordana Viotto da Cruz of University 13 Paris and to Esther Bishop of Zeppelin University Friedrichshafen. Both papers are considered for publication in the International Journal of Music Business Research (IJMBR).

Continue reading ‘Music Business Research 2014 – in retrospective’




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